Salvadorean President Nayib Bukele is continuing his brazen, hilarious and potentially disastrous Bitcoin gamble this month. Now calling himself CEO of El Salvador instead of “Emperor”, Bukele spent the past week bragging on Twitter about “buying the drip” whenever Bitcoin’s price drops and brushing off critics as “boomers.”
When mocked on Twitter that he probably buys crypto for the country on his laptop, Bukele simply replied, “Phone.”
Already notorious for his plan to set up Bitcoin mining using volcanic geothermal and spend the funds on building “Bitcoin City,” last Friday saw the president presenting winners of a pro-surfing tournament at “Surf City” with prize cheques paid in Bitcoin. He then returned to the capital for a political rally, where he appeared on-stage at the end of a jumbotron animation depicting him being beamed to earth from a UFO.
Bukele is also busy promoting his new “volcano bonds.” The president is offering $1bn in 10-year bonds paying 6.5% interest p.a. and promises to hold the money in – yes – Bitcoin for five years before selling. Holders of more than US$100,000 in volcano bonds will be eligible for Salvadorean citizenship.
Observers have no idea what to make of Bukele. Some are predicting El Salvador will become “the Singapore of the Americas,” but Bukele’s plans are unsurprisingly being condemned by the IMF, World Bank and Bank of England.
But Bukele doesn’t care. In fact, after the Bank of England’s public criticism, he replied, “I’m really concerned about @bankofengland printing money out of thin air.” Hard to argue.
So what’s the deal, really? For one thing, Bukele’s COVID response has been praised in terms of both healthcare and fiscal stimulus. El Salvador is 70% double-vaxxed and has donated its share of COVAX vaccines to other countries.
But the IMF warns that by 2025, repayments on El Salvador’s Eurobonds will reach an astonishing 20% of GDP. Like most countries in the Global South, the country has very little room to breathe.
For now, Salvadoreans will have to hope Bukele stays on a streak. With the country’s economy currently growing at 10% p.a. on a combination of mad hype and government spending, who knows – maybe they’ll get lucky?
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